- At the end of 2015, of the approximately 1.05 billion adults living in China 3.5% could be considered affluent.
- Asset growth is expected to be strongest in the $10m+ asset band, which will record a CAGR of 14.1% between 2015 and 2019, compared to a CAGR of 8.8% for mass affluent individuals.
- Deposits continue to dominate China's retail investments market, but mutual fund holdings are forecast to grow at the fastest pace over the next five years.
- Chinese high net worth (HNW) investors allocate a noteworthy proportion of their investable assets into non-traditional investments, mostly in direct property. However, this is expected to change thanks to the recent drop in property prices.
Wealth in China: Sizing the Market Opportunity analyzes China's wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.
Specifically, the report:
- Sizes the affluent market (both by the number of individuals and the value of their liquid assets) using proprietary datasets.
- Analyzes which asset classes are favored by Chinese investors and how their preferences impact the growth of the total savings and investments market.
- Examines HNW clients' attitudes towards non-liquid investments, such as property and commodities.
- Identifies key drivers and booking centers for offshore investments.
Reasons To Buy
- Benchmark your share of the Chinese wealth market against the current market size.
- Forecast your future growth prospects using our projections for the market to 2019.
- Identify your most promising client segment by analyzing the penetration of affluent individuals in China - both at country and regional level.
- Evaluate your HNW proposition by understanding how the local tax system affects your HNW clients.
- Review your offshore strategy by learning the HNW motivations for offshore investments and their preferred booking centers.
- Wealth growth is slowing but will still outstrip the West
- Key findings
- Critical success factors
2. Sizing And Forecasting The Chinese Wealth Market
- 2.8% of China's affluent individuals can be considered HNW
- Affluent individuals in China account for 3.5% of the total adult population
- Affluent individuals account for 3.5% of the population but hold 84.1% of liquid assets in China
- Chinese HNW individuals held $3,565bn in liquid assets in 2015
3. Drivers Of Growth In The Chinese Wealth Market
- China's retail savings and investments have impressed with remarkable growth in recent years
- China's retail investment market is forecast to perform strongly despite weaker economic conditions
- As can be expected in emerging markets, deposits dominate China's retail investment market
- Deposits continue to dominate China's retail investment market, but mutual fund holdings are forecast to grow fastest
- Retail deposit growth is set to pick up again in 2016, but will be less pronounced than in the past
- However, deposit rates remain low and face stiff competition from money market funds
- Despite strong growth rates, China's retail bond market will remain insignificant
- The subdued performance of the Shanghai Composite Index will limit growth of direct equities
- Money market funds are growing in popularity, shielding funds from the vagaries of the stock market
4. HNW Investment Preferences
- Chinese HNW individuals allocate 35% of their portfolios outside traditional liquid assets
- Chinese HNW investors allocate an above-average proportion of their wealth into property, but this is about to change
- Alternatives and commodities have become an integral part of the typical HNW portfolio in China
- A significant proportion of HNW wealth is invested offshore
- Despite maintaining a closed capital account, a significant amount is leaving the country every year
- Better returns overseas and local economic instability prompt Chinese individuals to invest offshore
- Tax is a comparatively limited driver for offshore investments
- The US is the single most important booking center for Chinese HNW wealth
- Abbreviations and acronyms
- Supplementary data
- Common Reporting Standard (CRS)
- Double taxation agreement (DTA)
- Foreign Account Tax Compliance Act (FATCA)
- Liquid assets
- Mass affluent
- Tax information exchange agreement (TIEA)
- Global Wealth Model methodology
- Global Retail Investments Analytics methodology
- 2015 Global Wealth Managers Survey
- Further reading
List of Tables
Table 1: Progressive tax rates levied in China, 2015
Table 2: China: adult population segmented by affluent category and asset band (000s), 2010-14
Table 3: China: adult population segmented by affluent category and asset band (000s), 2015-19
Table 4: China: total liquid wealth segmented by affluent category and asset band ($bn), 2010-14
Table 5: China: total liquid wealth segmented by affluent category and asset band ($bn), 2015-19
Table 6: Chinese yuan-US dollar exchange rate, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals represented 3.52% of the population in 2015
Figure 2: The affluent population holds 84.1% of retail liquid assets in China
Figure 3: While lower than in the past, retail savings and investment growth is forecast to remain strong
Figure 4: Deposits account for 81.1% of the Chinese retail and investment market
Figure 5: Mutual funds and bonds are forecast to grow at impressive rates
Figure 6: Deposit growth is inextricably linked to real GDP growth, but importantly always outperforms it
Figure 7: Retail bond holdings are negatively correlated to the Shanghai Composite Index
Figure 8: Stock market performance has been weak over the past year
Figure 9: There is a strong correlation between stock market performance and equity funds, and to a lesser extent mutual fund holdings
Figure 10: China's total fund industry is dominated by money market funds
Figure 11: A significant proportion of HNW wealth is allocated to non-traditional investments
Figure 12: Chinese HNW individuals hold 27% of their assets offshore
Figure 13: Asset diversification and investment options remain the biggest motivations for offshore investment
Figure 14: The largest proportion of Chinese HNW offshore wealth is booked in the US
Figure 15: The Chinese government has signed several TIEAs over the past few years